Caste system?
I am really surprised at the frequent mention of caste system as a root of all ills in India. I am not sure how you get that impression. Actually Govt policies overwhelmingly favor the 'backward' castes. The reverse discrimination in India is outrageous compared to the US.
Caste system is still very active in many parts of rural India where the 'lower' castes are treated really bad. In urban India the caste system (except in case of marriage) is non-existent. I lived in Mississippi for 3 years in the late 80s and I was taken aback by the racism undercurrents there and did not think that this sort of thing could exist in a place like the US.
Most of the problems in India come from rampant corruption which also leads to sheer inefficiency. The filth you saw in Madras was because no one is willing to do their job. The people have gotten used to this and are generally apathetic. For the same reason, no one cares about the quality of graduates India produces as long as they get a diploma. Sadly, quality control does not exist in any field in India.